RSSWhy Are PPI Plans So Controversial?
May 07
The idea of having payment protection insurance (PPI) to protect you from defaulting on your debts in the event of some adverse financial change, such as losing your employment, may sound like a fantastic idea to many people. In fact there are some very strong arguments for having such an insurance, especially since most loan insurance programs will cover you for a full year, giving the average person enough time to regain their financial footing and take over payments on their debts once more. However in practice these plans have turned out to be quite controversial due to how they are implemented, or more specifically how they are avoided. The reason why there is such a negative stigma to PPI plans at the moment are twofold: firstly, many people are sold payment protection plans without their knowledge as part of a package deal with their loan (or, in previous years, their credit card). Secondly, many banks or insurance providers have found numerous ways to avoid paying the insurance benefits to legitimate claims when people need the benefits the most, thus receiving hundreds or thousands of pounds in payments without needing to ever actually provide the service. In 2007 a consumer watchdog group carried out an undercover "mystery shopper" sting that resulted in many lenders being fined by the Financial Services Authority as a result of these practices, and a concurrent investigation by the Office of Fair Trading further exposed deceptive practices and misdealing that helped lead to the current stigma that payment protection plans hold today. Ultimately payment protection insurance can be a very positive thing for many people who teeter on the edge of being unable to make payments on their debts, but only if they are aware that they are paying for such a service and if they are not already covered by similar plans from their employers (such as paid sick leave). If you locate a proper insurance provider that has developed a reputation for honesty and fair dealings this may be a legitimate option for you and your family, but be sure to educate yourself about the system before opting in, and most definitely be fully aware of your rights in case you ever need to file a claim. Knowledge is power, and widespread ignorance is the tool unscrupulous companies are using to take advantage of the unwary. Don't let that happen to you.